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How Microsoft Became Innovative Again

• Behnam Tabrizi

Inside the cultural turnaround that helped the tech giant think like a startup.

How did Microsoft revive its culture of innovation? For years, the company has been written off for playing defense on its position in the tech world. But, as signaled by its partnership with OpenAI and its challenge to Google’s search supremacy, it has gone back on the offense. The about face was, at its core, a cultural shift, driven by CEO Satya Nadella. He drove this by inviting an existential moment when he stepped into the job, reconsidering the company’s purpose. Then, he laid out strategic changes that would enable the company to think more like a startup, and made business decisions that committed the company to this new direction.

For years now, observers of tech have written off Microsoft as a 20th-century phenomenon, fat and happy from its Windows monopoly. The tech giant hadn’t had a breakthrough innovation in decades. It was rich enough to be a fast follower, but too big and bureaucratic to lead in any market. Jeff Bezos was known to gesture east and admonish his Amazon colleagues not to become complacent like their Seattle neighbor.

• BT Behnam Tabrizi has been teaching “Leading Organizational Transformation” at Stanford University’s Department of Management Science and Engineering and executive programs for more than 25 years. An expert in organizational and leadership transformation, he has helped thousands of CEOs and leaders plan, mobilize, and implement innovative transformational initiatives. He has written ten books, most recently  Going on Offense : A Leader’s Playbook for Perpetual Innovation  (IdeaPress Publishing, August 2023). TabriziBehnam

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Microsoft Five Forces Analysis (Porter Model)

Microsoft Corporation strategically addresses the issues highlighted in this Five Forces analysis of its business. Michael Porter developed the Five Forces analysis model to understand the external factors significant to an organization’s industry environment. In the case of Microsoft, these external factors are an effect of the activities of other firms in the information technology and online services industry. Such factors are also based on the decisions of customers and suppliers. Moreover, substitutes influence Microsoft. To maintain its market position as a major competitor, Microsoft considers the issues outlined in this Five Forces analysis of the technology business.

This Five Forces analysis (Porter’s model) of Microsoft Corporation shows that competition is the external factor with the highest intensity in the computer technology industry environment. However, a variety of issues affect Microsoft, as shown in the details of this Five Forces analysis.

Summary: Five Forces Analysis of Microsoft

Microsoft must develop appropriate responses to overcome the impacts of competitive factors identified in this Five Forces analysis. The ability to strategically address these concerns influences the company’s resilience. The intensities of the Five Forces in Microsoft’s industry environment are as follows:

• Competitive rivalry or competition: Strong force
• Bargaining power of buyers or customers: Moderate force
• Bargaining power of suppliers: Moderate force
• Threat of substitutes or substitution: Weak force
• Threat of new entrants or new entry: Moderate force

The results of this Five Forces analysis of Microsoft put focus on competitive rivalry as the strongest force affecting the business and the information technology industry environment. In this regard, the company must implement strategies that boost competitive advantage. For example, Microsoft must increase its research and development efforts, along with improved product development, to maximize competitiveness against other firms’ products. Innovation also supports Microsoft’s generic competitive strategy and intensive growth strategies . This Five Forces analysis shows that the company must include the bargaining power of buyers, the bargaining power of suppliers, and the threat of new entry in strategic formulation. These three forces have a moderate and significant effect on Microsoft’s performance. The threat of substitutes is a minimal consideration, although the technology business can also work on this force to enhance product attractiveness.

Competitive Rivalry or Competition with Microsoft (Strong Force)

Microsoft needs to effectively compete to remain successful. This aspect of the Five Forces analysis determines the effects of firms on each other and the related conditions of the industry environment. In the case of Microsoft, the following external factors and their intensities exert the strong force of competition against the company:

• Moderate switching costs (moderate force)
• High aggressiveness of firms (strong force)
• High diversity of firms (strong force)

Moderate switching costs have a corresponding moderate influence on Microsoft’s business. For example, customers have a moderate tendency to shift to other firms’ products. While such shifting is not easy, companies upgrading their systems could opt to use computer hardware and software products from Microsoft’s competitors. On the other hand, the high aggressiveness of firms leads to a strong force that significantly affects the company’s industry environment. These technology firms are aggressive in terms of their rate of innovation and their marketing campaigns. Microsoft must also consider the strong force based on the high diversity of firms. For example, the company must innovate products that compete based on a wide variety of features present in other firms’ products. In this aspect of the Five Forces analysis of Microsoft, external factors support the strong force of competitive rivalry, which is a priority issue in strategic decision-making.

Bargaining Power of Microsoft’s Customers/Buyers (Moderate Force)

Microsoft needs to continue satisfying customers, who significantly determine the company’s performance. The impact of customers or consumers on the information technology industry environment is evaluated in this aspect of the Five Forces analysis. Microsoft must respond to the moderate force of the bargaining power of customers, based on the following external factors and their intensities:

• Low substitute availability (weak force)
• High quality of information (strong force)

The low substitute availability represents the difficulty of access to effective substitutes to Microsoft’s products. For example, customers face difficulties in finding non-computer-network solutions that are as effective and efficient as the company’s online services. In the Five Forces analysis model, this external factor exerts a weak force on Microsoft and its industry environment. However, the moderate switching costs create a considerable force on Microsoft’s business. Because of this intensity of switching costs, customers have a considerable tendency to shift from the company’s products and start using other firms’ products instead. The external factor of the high quality of information further empowers buyers in terms of adequate information that they can use to compare Microsoft’s hardware and software products to competitors. For instance, such information is easily available from online sources. Based on the external factors in this aspect of the Five Forces analysis, Microsoft must include the moderate force of the bargaining power of customers as a significant concern in its business strategies.

Bargaining Power of Microsoft’s Suppliers (Moderate Force)

Microsoft’s business depends on supply conditions. This aspect of the Five Forces analysis outlines the influence of suppliers on the computer hardware and software industry environment. The following external factors and their intensities maintain the moderate force of the bargaining power of suppliers on Microsoft Corporation:

• Moderate size of suppliers (moderate force)
• Moderate population of suppliers (moderate force)
• Moderate overall supply (moderate force)

The moderate size and population of suppliers enable them to impose a significant but limited influence on Microsoft’s business. For example, some moderately sized suppliers of computer hardware components can change their pricing, which ripples to a potential adjustment in the company’s prices. The moderate overall supply also creates a significant but limited force on Microsoft. The intensity of this force could increase if the overall supply decreased. Thus, the external factors in this aspect of the Five Forces analysis of Microsoft points to the moderate force of the bargaining power of suppliers as an important strategic consideration in the computer technology industry environment.

Threat of Substitutes or Substitution (Weak Force)

Substitutes can reduce Microsoft’s market share. The effects of substitutes on firms and their industry environment are determined in this aspect of the Five Forces analysis. In Microsoft’s case, the following external factors and their intensities impose the weak force of substitution on the business:

• Low performance of substitutes (weak force)
• Low availability of substitutes (weak force)

Substitutes, such as non-online or manual-mechanical processes, have lower performance compared to Microsoft’s current products. In the Five Forces analysis model, this external factor weakens the threat of substitution against the company. In relation, the global adoption of increasingly advanced technologies reduces the availability of substitutes and further weakens the threat of substitution that Microsoft experiences. While moderate switching costs help facilitate substitution, this external factor is not enough to significantly strengthen substitutes. Based on this aspect of the Five Forces analysis, the weak force of the threat of substitution is a minor issue in Microsoft’s industry environment.

Threat of New Entrants or New Entry (Moderate Force)

In this aspect of the Five Forces analysis, the focus is on the influence of new entrants on the information technology industry environment. The intensities of external factors that lead to the moderate force of the threat of new entry against Microsoft are as follows:

• High cost of brand development (weak force)
• Moderate cost of doing business (moderate force)

The high cost of developing the brand of a technology business weakens the effects of new entrants on companies, like Microsoft Corporation. However, the moderate cost of developing such a business presents considerable chance for new entrants to find success in competing in the computer hardware and software market. The moderate switching costs also partly contribute to the potential success of new entrants in competing with Microsoft. These external factors moderately contribute to the competitive concerns of the company. Overall, such a condition corresponds to the moderate force of the threat of new entry against Microsoft. This aspect of the Five Forces analysis shows that new entry is a significant issue affecting Microsoft’s industry environment.

• Facts About Microsoft .
• Jahan, S. A., & Sazu, M. H. (2023). Role of IoTs and analytics in efficient sustainable manufacturing of consumer electronics. International Journal of Computing Sciences Research, 7 , 1337-1350.
• Kazakbaevna, K. D. (2023). Attention and achievements in the IT industry today. Texas Journal of Multidisciplinary Studies, 19 , 50-52.
• Microsoft Corporation – Form 10-K .
• Sforcina, K. (2023). Digitalizing Sustainability: The Five Forces of Digital Transformation . Taylor & Francis.
• U.S. Department of Commerce – International Trade Administration – Software and Information Technology Industry .
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• A Top International Negotiation Case Study in Business: The Microsoft-Nokia Deal

International negotiation topics in business: merging two distinct corporate cultures with as little conflict as possible

By PON Staff — on May 2nd, 2024 / International Negotiation

We sometimes require counterparts to meet certain conditions before agreeing to enter into talks. Negotiating conditions to your participation in dealmaking can be a powerful move, but it also carries some risks that need to be carefully considered. And international negotiation brings on more challenges than most. 

Let’s look at the international negotiation case study of Microsoft’s decision to purchase Finnish mobile phone company Nokia’s mobile device business for $9.5 billion. The deal, which closed in 2014, quickly proved disastrous: Microsoft wrote off nearly all of the deal’s value and laid off thousands of workers in July 2015. Although there were many reasons the deal was a bad bet for Microsoft, a negotiating condition that Nokia set before agreeing to take part in serious negotiations may have offered one warning sign. 

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International Negotiation Behind the Microsoft and Nokia Deal: Nokia Builds Its BATNA

Microsoft and Nokia had been partners since 2011, when the Finnish firm began installing Microsoft’s Windows Phone operating system (OS) on its smartphones. But Nokia lagged far behind smartphone competitors in innovation and market share, and the Windows Phone OS, used primarily on Nokia handsets, was failing to meet expectations.

In January 2013, Microsoft CEO Steven Ballmer called Risto Siilasmaa, the chairman of Nokia’s board of directors, to raise the possibility of Microsoft buying divisions of Nokia. Soon after, the two men discussed the idea at a conference in Spain. They agreed inefficiencies existed in their agreement and brainstormed solutions, from minor tweaks to business mergers, reports Ina Fried on the technology news website AllThingsD.com . 

Nokia considered letting its deal with Microsoft lapse and trying to revive its handset business by adapting its smartphones to Google’s Android system. By cultivating this strong BATNA , or best alternative to a negotiated agreement, Nokia gained the power to walk away from a subpar offer from Microsoft.

Indeed, after hearing Microsoft’s first formal pitch for an acquisition in New York, Siilasmaa informed Ballmer that they were too far apart on price and other issues, such as which company would own Here, Nokia’s mapping service. Nokia executives believed they needed to hold on to their ability to sell Here to other companies. Meanwhile, Microsoft felt it couldn’t keep pace with competitors without controlling the mapping technology it was using in its phones, tablets, and PCs, and on the web, according to AllThingsD.com. Subsequent meetings between the parties in London and Finland went nowhere .  

A Deal Takes Shape

A breakthrough came when Nokia informed Microsoft that it would proceed with formal talks only if Microsoft agreed to abide by certain negotiating conditions , most notably a commitment to set up a financing source for Nokia and the caveat that Here was off the table. 

Microsoft agreed. At a meeting in New York, the parties happened upon a solution to the question of who would control the mapping service. Why not share the code, with Nokia retaining intellectual-property rights to Here? Nokia realized it could grant Microsoft a license to access and customize Here’s source code and own any improvements it made. Nokia would retain ownership of Here and the power to license the service to other companies. Ballmer and Siilasmaa shook hands on the outlines of an agreement, which was filled out over the next two months. 

The Risks of Setting Negotiating Conditions

A negotiating condition is an “if” statement—such as, “If you agree to take this issue off the table, I’ll negotiate”—that qualifies your entry into a negotiation or acceptance of a deal. Setting negotiating conditions can be a particularly useful tool when it comes to improving the appeal of another party’s onerous request or demand, notes Harvard Business School and Harvard Law School professor Guhan Subramanian

But insisting that the other party agree to certain terms as a precondition to negotiation can be risky. In their 2012 labor dispute, for example, the musicians of the Minnesota Orchestra said for many months that they would negotiate with the orchestra’s management only after a lockout ended. But management was loath to accept this negotiating condition , aware that the players would have little motivation to accept significant salary cuts if they were performing and being paid. 

Before stipulating a negotiating condition , remember that your counterpart will weigh the costs and benefits of accepting your negotiating conditions against their alternatives away from the table. If you have a strong BATNA , as Nokia appeared to, then it may make sense to take this risk. But note that even in this case, Microsoft made inroads on the mapping service issue that Nokia had claimed was nonnegotiable. Microsoft may have salvaged the deal by refusing to assume that Nokia’s negotiating conditions were nonnegotiable—a move Microsoft’s leaders likely later came to regret.

Two key lessons on negotiating terms and conditions emerge from these failed negotiation examples . First, you should demand only those conditions that are truly deal breakers for you. Second, try to craft negotiating conditions in ways that provide benefits or concessions to your counterpart. Even when you have the power to get what you want, your efforts to help your counterparts get what they want will pay off in the form of stronger relationships and longer-lasting deals.

Have you had experience negotiating conditions to a deal within an international negotiation? If so, how did the process work out?

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No Responses to “A Top International Negotiation Case Study in Business: The Microsoft-Nokia Deal”

3 responses to “a top international negotiation case study in business: the microsoft-nokia deal”.

There are no more phones with ‘Nokia Lumia’. They are all ‘Microsoft Lumia’. Microsoft completely scraped the company and rebranded the devices. Nokia got a bad future

There has been a completely mixed response to whether the deal was good or was a decision taken in a hurry. Nokia surely can use this incoming cash flow on some great products, but the issue now is that Nokia was recognized by its Mobile Devices and there will be almost zero difference between a new product category (coz no more mobile phones)coming under the NOKIA brand name or a completely new Brand name because they will both have zero popularity in that field.

It would probably be good for Nokia to come up with a new brand name and leave the Nokia legacy behind in its Nokia Research Department and nowhere else. As you could feel, this deal saddens me 🙁

It’s 2015 now buddy and Nokia’s all of microsoft now. You should be a lot sad now 😛

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Satya Nadella at Microsoft: Instilling a Growth Mindset

By: Herminia Ibarra, Aneeta Rattan, Anna Johnston

When Satya Nadella took over as CEO of Microsoft in 2014, he inherited a firm fading toward irrelevance, plagued by internal fights and inertia. Earlier that year his wife, Anu, had given him a…

• Length: 22 page(s)
• Publication Date: Jun 1, 2018
• Discipline: Organizational Behavior
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When Satya Nadella took over as CEO of Microsoft in 2014, he inherited a firm fading toward irrelevance, plagued by internal fights and inertia. Earlier that year his wife, Anu, had given him a best-selling book by Stanford psychologist Carol Dweck entitled Mindset: The New Psychology of Success, suspecting it might give Nadella some ideas for Microsoft. He adapted the idea to encourage employees to shift from Microsoft's historical "know-it-all" culture to embrace a "learn-it-all" curiosity. The case study provides background on Nadella's challenges and context, as well as how he and his leadership team executed their culture change effort.

Learning Objectives

Show a leader's thought process on the need for culture change, with particular focus on the vision for change as a reflection of the life experiences of the leader.

Detail the execution levers that Nadella and his team identified and used during the change process.

Introduce the concept of organisational culture, focusing on the process of culture change and the role of leaders and their teams in reinforcing or transforming culture.

Introduce the idea of "mindsets," focusing on how they affect behaviour and reflect organisational culture, and what leaders can do to inculcate a growth mindset as a means of making cultural change and enhancing organisational performance.

Jun 1, 2018

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Organizational Behavior

London Business School

LBS128-PDF-ENG

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Societal Resilience

Building a more resilient society through mission-driven research and applied technology

Case study: Mapping Organizational Resilience

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“When I think about digital transformation now, I break it into two things. I think about resilience and what Microsoft can do to help any business be more resilient” — Satya Nadella (opens in new tab) , Microsoft Q4 2020 Earnings Call

The concept of organizational resilience can be used to explain why some organizations succeed while others fail in times of change. Every organization has limits beyond which it ceases to operate effectively.  When emerging crises push organizations beyond these limits, there is immense pressure to adapt to the new environment – and quickly. Organizations that fail to adapt may no longer be able to achieve their purpose, return a profit, or justify their continued existence.

Business closures at the onset of the Covid-19 pandemic are a stark illustration of how many organizations operate at the limits of their capacity, even in normal times. Under sustained pressure, even the best organizations may be pushed to their limits. How can we help organizations to understand their capacity for resilience before it is needed, and how can we help them to increase that capacity before it is too late?

One important step is digital transformation. All the forces driving this cross-industry process have been multiplied by the pandemic, and Microsoft has published a playbook (opens in new tab) for accelerating the kind of digital transformation that facilitates business resilience (opens in new tab) . But what does a “digitally transformed” organization look like, how does it operate over time, and how can we identify behaviors that represent both resilience and rigidity in the face of threats?

Organizational network analysis

For several years, we have been working with the Microsoft Workplace Analytics (WPA) team to explore how advances in graph statistics could be applied to Organizational Network Analysis (ONA), as well as how such network analysis could reveal insights about how work actually gets done in practice. This can be quite different to how work is organized “in theory” as represented by formal org charts, and the degree of alignment can vary dramatically both across different parts of the organization and over time.

Our initial explorations focused on the use of network visualization to map out the structure of organizations based on pairwise collaboration between individuals, inferred from shared activity across Outlook and Teams (e.g., email or message exchange; shared meetings or channels). We were interested in the identification of workgroups that reveal the organic, emergent, and informal organization of work. Using network community detection algorithms to infer the hierarchical structure of these collaboration networks, we were able to provide a contrasting model of organization to the hierarchical reporting structures of org charts.

These workgroup maps gave us something tangible to share with company executives as offering new perspectives on their own organizations. They allowed vague concepts like “siloed” and “stretched” to become self-evident in the visual structure of workgroups, but also raised several important questions: How well do workgroups align with reporting hierarchies? How much do workgroups vary their patterns of collaboration over time? And how can we measure and visualize these qualities as a way to understand the culture of collaboration across an organization?

Workgroup mapping

Our workgroup mapping (opens in new tab) paper describes how we answered these questions using two new metrics, representing (1) the “freedom” of workgroups to collaborate across organizational boundaries, and (2) the “fluidity” of workgroup relationships over time. To date, we have used these metrics (and accompanying presentation generating pipeline) to share collaboration insights with the leaders of hundreds of major companies who have provided their tenant data for this purpose.

When the Covid-19 pandemic struck, we turned our attention to how such collaboration metrics might be used as a barometer of organizational health over time – revealing how organizations responded to the unprecedented shock and its enduring consequences for the practice of work. For those organizations who were able to transition to home working, the signals from communication and collaboration software would, for the first time, capture all interactions in their new, virtual, and “digitally transformed” workplaces. What could this tell us about the response of our own organization, our customer organizations, and the industries that we serve? And what do different levels of collaboration metrics across workgroups tell us about the resilience of the broader organization?

Organizational resilience

Our toward resilience (opens in new tab) and uncovering resilience (opens in new tab) articles describe our process of deriving new collaboration metrics that would allow us to understand the impact of the pandemic on our own organization, Microsoft. For example, we define “churn” as the proportion of collaborative relationships from one period that are lost in the following period. If we align these periods either side of a disruptive event (such as a pandemic passing its tipping point), we might expect to more resilient organizations experience less churn. Indeed, this is what we observed in general for Microsoft – but that’s not the whole story.

Most employees retained their existing collaborations and even expanded their networks beyond their customary workgroups. For the strategic and operational “control center” of the organization, however, the degree of churn was dramatic. This makes sense – the charter of such groups is to absorb external shocks and chart a course towards recovery while allowing the core engines of productivity to proceed uninterrupted. Such focused churn is a sign of dedicated crisis response, and when combined with the net growth of individual networks, is a clear marker of organizational resilience. In contrast, a “panic response” would manifest as large-scale churn across the organization as connections and work are dropped, while “threat rigidity” would show as individual networks growing smaller and more stable as people double down on what and who they already know.

Building on this single-company view, we expanded our analysis to examine the effects of the Covid-19 pandemic across organizations and industries. The latest Microsoft Work Trends Index (opens in new tab) describes how one such analysis incorporated 122 billion email interactions and 2.3 meeting interactions across industries and countries, showing an overall increase in the “siloed” nature of workgroups with strong internal relationships and clear group boundaries (the “modularity” metric). In this preprint (opens in new tab) describing a related collaboration with the University of Washington and Johns Hopkins University, we present the analysis of 360 billion email interactions across more than 4000 organizations. The main finding here is that the workgroup silos emerging in response to the pandemic have a different membership structure to pre-pandemic times – and that this new structure has persisted over time.

In other words, we have observed the mass adaptation in the organization of work towards smaller, more defined, and fundamentally different workgroups than existed before the pandemic. While such adaptation suggests resilient response, whether the resulting structures helps to drive resilient recovery is an open and active research question.

Resilience principles in action

• The pandemic-induced shift to remote working has created an always-on culture that puts the health of both employees and businesses at risk, since people and organizations operating closest to their limits are the least resilient to future shocks. Workgroup maps provides a unified and unit-level view of how the structure and demands of work activities are evolving over time.
• Within Microsoft, we are developing our organizational resilience capabilities in collaboration with Workplace Analytics, Office, and others. Externally, we are collaborating with Johns Hopkins University on “Organizational Dynamics to Enable Post-Pandemic Return to Work” through a funded study on pandemic preparedness (opens in new tab) and the University of Washington Foster School of Business on the implications of such organizational dynamics for business management.
• We have released the graph statistics and visualization capabilities behind our workgroup maps via the open-source Graspologic (opens in new tab) library. This library is the result a merging our previous topologic package with the GraSPy package developed by our collaborators at JHU, creating a unified source of advanced graph algorithms for the Python community.
• This work focuses on capturing and modelling the people networks implicit in organizational collaboration logs. How these networks partition into communities – and how these communities can be characterized by various graph statistics and network metrics – yields high-level insights into the practice of work that can be compared against known work outcomes and other covariates.
• Our workgroup mapping pipeline automates collaboration log analysis and presentation-building workflows in ways that democratize expert workflows from two distinct areas of expertise. The resulting presentation artefacts, together with the outputs of our large-scale analyses, represent new sources of real-world evidence that can be used to inform and evaluate organizational policy.
• Any use of organizational network analysis must respect the privacy of individual employees represented in unit-level visualizations such as network layouts (where each node is one member of the organization). Our approach is to select metrics that are neither inherently good or bad, but which represent desirable variation in practice, and calculate and communicate these at a level that aggregates the contributions of many individuals (e.g., the sub-organization or workgroup level).
• Organizations are a key entity at the mesoscale of society. Revealing the structure and dynamics of organizational activities in a way that helps shape positive organizational policies is an efficient way of reaching and benefiting many individuals. Even within organizations, we focus on the mesoscale of communities or workgroups as the implicit and underrecognized units of organization against which policy interventions should be planned, implemented, evaluated, and revised.
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The Transformation of Microsoft

• Format: Print
• | Language: English
• | Pages: 15

About The Authors

C. Fritz Foley

E. Scott Mayfield

Related work.

• Faculty Research
• The Transformation of Microsoft  By: C. Fritz Foley and F. Katelynn Boland

• INSIDER REVIEWS
• TECH BUYING GUIDES

CASE STUDY: How Satya Nadella overhauled Microsoft's cutthroat culture and turned it into a trillion-dollar 'growth mindset' company

Ashley stewart,shana lebowitz   .

• Microsoft is a trillion-dollar company thanks largely to a culture shift led by Satya Nadella.
• Since Nadella became CEO in 2014, he's encouraged the entire company to adopt a growth mindset, or the belief that skills are developed through hard work and challenges are opportunities to learn.
• Before Nadella took over, Microsoft was characterized by competition between teams and between individual employees.
• Now, in keeping with a growth mindset, Microsoft evaluates employees' performance based partly on how much they helped their colleagues succeed. The company also looks to learn from its former rivals in the tech industry.
• Business Insider spoke with a range of company insiders and organizational researchers to get the inside story on how to change the culture of a 150,000+ employee software giant.
• Microsoft is a case study in how a growth-mindset culture can help companies succeed in the future economy.
• Click here for more BI Prime content.

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A cartoonist once drew an illustration depicting Microsoft's organizational chart as warring factions.

Take a look and you'll see three separate gangs: one blue, one green, one yellow. The gangs are assembled in pyramid-shaped hierarchies, with one leader at the top, two or three deputies at the next level, and so on.

A hand sticks out from each pyramid, pointing a gun directly at one of the others. It's clear. This is war.

And then Satya Nadella became CEO.

Nadella described the era of warring gangs in his 2017 memoir-manifesto, " Hit Refresh :" "Innovation was being replaced by bureaucracy. Teamwork was being replaced by internal politics. We were falling behind."

That particular cartoon - drawn in 2011 by a Google employee named Manu Cornet , no less - made changing Microsoft's culture Nadella's No. 1 goal as CEO.

"As a 24-year veteran of Microsoft, a consummate insider, the caricature really bothered me. But what upset me more was that our own people just accepted it," Nadella wrote. "When I was named Microsoft's third CEO in February 2014, I told employees that renewing our company's culture would be my highest priority."

Since becoming CEO, Nadella has been credited with a grand reinvention of Microsoft, exemplified by its market value exceeding $1 trillion, one of just a handful in history to hit that mark. When Nadella first took over, its market value was around $300 billion. The company has shifted from a has-been to a cloud powerhouse.

One of the keys to this transformation is a psychological concept that's become a mantra at Nadella's Microsoft: growth mindset .

Microsoft has traded a fixed mindset for a growth mindset

Growth mindset describes the belief that skills are developed through hard work and that challenges are opportunities to learn. Fixed mindset, on the other hand, refers to the belief that talent is innate and that struggling is a sign of failure. Research on the difference between growth and fixed mindset - and how they predict success - was pioneered by Stanford's Carol Dweck.

Early on in her career as a developmental psychologist, Dweck visited children at school and presented them with a series of increasingly difficult puzzles. Her goal was to better understand how people cope with failure. Some students, she found, weren't fazed by it.

In her 2006 book, " Mindset ," she recalls one 10-year-old boy who "pulled up his chair, rubbed his hands together, smacked his lips, and cried out, 'I love a challenge!'"

Dweck would spend the next five decades trying to figure out the difference between people who relish a good challenge and those who fear failure. Scores of studies published under her name suggest that people who see intelligence and abilities as learnable are more successful, personally and professionally, than people who think they're static.

Recently, Dweck coauthored a study that drew a link between growth mindset and organizational success . Employees who think their companies have a fixed mindset, the study found, interpret the company's culture as less collaborative, less ethical, and less willing to take risks than employees who think their companies have a growth mindset.

Given the rapid pace of technological change , these research findings are hyper-relevant. Across industries, adopting a growth mindset may be the only way to survive, and certainly the only way to thrive. When neither executives nor rank-and-file employees can predict what their jobs will look like next week, they need to embrace the resulting vulnerability, and get excited about learning.

Plenty of companies, in industries from telecommunications to early education, talk about cultivating a growth mindset , and about looking for job candidates who have it . But Microsoft is perhaps the most powerful example of an organization that has used growth mindset, and the psychology behind it, to rebuild its culture.

In many ways, fixed mindset and growth mindset can describe Microsoft before and after Nadella.

Nadella has encouraged Microsoft employees to be 'learn-it-alls' instead of 'know-it-alls'

Bill Gates is the founder and former CEO of Microsoft. He was famous for his meltdowns.

Gates was famous for meltdowns and browbeating - so much so that Microsoft cofounder Paul Allen once described working with Gates as "being in hell." Gates would only back down if you could convince him you knew what you were talking about, Allen said.

Gates' successor, Steve Ballmer, also known for an explosive temper, later presided over the atmosphere depicted in that cartoon Nadella was determined to address. Ballmer was known for cultivating a culture in which Microsoft teams warred with each other, as previously reported by Business Insider .

Nadella, who joined Microsoft as an engineer in 1992, came up in this culture, before becoming CEO in early 2014.

By that point, the company's bid to compete in the smartphone market through the purchase of Nokia was proving to be a burden and would lead it to write off nearly the entire $7.6 billion acquisition price. The personal computer market was shrinking, leading to declines in Microsoft's flagship Windows operating system business, and the Xbox One console's poorly received launch made it a punchline.

Microsoft's history as a tech-industry pioneer wouldn't help the company compete, Nadella wrote in an email to employees on his first day as CEO. The company needed a change in mindset.

"Our industry does not respect tradition - it only respects innovation," Nadella wrote on Feb. 4, 2014, in a memo to employees days after taking on the CEO role. "Every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this."

Nadella's leadership philosophy evolved into the adoption of a growth mindset. He asked employees to be "learn-it-alls," not "know-it-alls," and promoted collaboration inside and outside the organization. Employees are now evaluated partly on how much they've helped others on their team.

Microsoft introduced a new performance-management framework based on growth mindset

With any company culture shift, executives run the risk of promoting jargon more than action, and of HR representatives being the only ones who know there's a culture change underway.

Microsoft has tried to avoid that fate, not only by training its employees on the psychology of growth mindset, but also by embedding the concept into its daily work flow.

Prompts to adopt a growth mindset appear on posters throughout Microsoft's campuses ( something at which employees sometimes poke fun ). At the start of a meeting, a manager might remind colleagues to approach an issue with a growth mindset.

And in one of the most significant manifestations of growth mindset, Microsoft has eliminated stack ranking .

Stack ranking was famously used by Jack Welch when he was CEO of General Electric. Ballmer used the system at Microsoft to evaluate employees, although he did start phasing it out prior to his departure. Microsoft managers had to rank their employees from one to five in equal measure. Which meant that, no matter how good the employees were, some of them had to get the lowest ranking of a five.

Performance was defined in stack ranking as the quality of individual work, and that emphasis on individual performance was linked to fierce competition among Microsoft employees. It was also a barrier to Microsoft's innovation, since it facilitated a culture that rewarded a few standout team members and even gave employees incentive to hope their colleagues failed.

As Microsoft's chief human resources officer, Kathleen Hogan has overseen the adoption of a growth mindset.

Dweck's research helps explain this trend, too. Her studies suggest that stack ranking's emphasis on "star" employees can leave everyone else afraid to try anything new, for fear of failing. In turn, that means companies are less innovative.

Microsoft leadership says its new system for evaluating employees instead rewards collaboration. Managers and employees meet often to discuss performance , in keeping with the general trend of companies nixing annual reviews and having managers regularly speak with employees about their work.

"What we really value is three dimensions," said Hogan , Microsoft's chief people officer. "One is your own individual impact, the second is how you contributed to others and others' success, and the third is how you leveraged the work of others."

To use Hogan's examples, maybe a more seasoned employee helped someone new to the team, or a software engineer built on another engineer's work instead of reinventing it.

Microsoft recently applied growth mindset to a new framework for managers : model, coach, care. That's a combination of setting a positive example for employees, helping the team adapt and learn, and investing in people's professional growth.

To measure the impact of these initiatives in real time, Microsoft emails employees with a different question every day asking how they're feeling about the company and its culture.

The shift from competition to collaboration might seem like it would be a breath of fresh air. And on the whole, it has been. But employees say it's presented its own challenges, too.

Nadella pushes Microsoft executives to take on stretch assignments

Peter Lee said becoming corporate vice president of Microsoft healthcare was a huge challenge.

It was 2017 and Lee - now corporate vice president of Microsoft healthcare - had long worked on broader technology problems as a key leader in Microsoft Research, the company's research division.

Nadella wanted him to take on a new challenge and lead the company's emerging health care business, using his background in artificial intelligence and cloud computing to find new ways to tune the products to the needs of healthcare companies.

"Taking on healthcare was something that really perplexed me at first," he said. "I joked Satya sent me out into the Pacific Ocean and said, 'Go find land.'"

Adopting a growth mindset can be uncomfortable, he said.

"Growth mindset is a euphemism because it can feel pretty painful, like a jump into the abyss," he said. "You need to be able and willing to confront your own fixed mindset - the things that make you believe something can't work. It's painful to go through personally, but when you get past it, it's tremendously rewarding."

The transition has been edifying, both in terms of his personal growth - Lee was recently named to the National Academy of Medicine - and Microsoft's growth in the industry, as it establishes itself as a meaningful player in healthcare tech.

Microsoft now sees the business case for letting go of its rivalries with other tech giants

Under Ballmer, Microsoft was notorious for prioritizing its Windows operating system and Office productivity applications businesses over the rest of the company - at one point, it even canceled the Courier tablet, which would have been an early, future-looking competitor to Apple's iPad, because it may have undermined Windows.

Likewise, Microsoft once shunned Linux, a free open-source operating system once considered the biggest threat to Windows. Ballmer once called it a "cancer." But early on in Nadella's time as CEO, Microsoft changed tack and proclaimed, " Microsoft loves Linux ."

It wasn't just Microsoft being friendly. There was a strong business case for blurring boundaries. At the time, Microsoft said it realized its customers used both Windows and Linux, and saw providing support to both as a business opportunity on-premise and in the cloud. That would have been unthinkable in the Ballmer years, but it's proven to be a savvy business move: Microsoft recently hinted that Linux is more popular on its Azure cloud platform than Windows itself.

Microsoft's relationship with Salesforce has followed a similar trajectory. Whereas Ballmer had frequent and public bouts with Salesforce CEO Marc Benioff , Microsoft under Nadella put aside its rivalry with Salesforce - which competes directly with Microsoft's customer-relationship-management Dynamics 365 product - in order to ink a big cloud deal that was good for the company overall.

Nadella even invites leaders from companies across industries to Microsoft's CEO Summit so the executives can learn from each other. Ballmer, meanwhile, famously snatched an employee's iPhone at a company meeting and pretended to stomp on it.

Which is not to say Microsoft always plays nice in the Nadella era. The company last summer changed licensing agreements to raise prices - often significantly - when customers choose to run certain Microsoft software on rival clouds including Amazon Web Services or Google Cloud. And it's been trading public barbs with AWS over the still contested $10 billion Pentagon cloud contract.

The Trump administration awarded the contract to Microsoft over AWS, but Amazon is challenging the decision in court, alleging political interference. In February, a judge ruled that Microsoft must stop working on the contract.

The culture shift at Microsoft is an ongoing process

The beginning of Microsoft's culture shift was rocky.

In "Hit Refresh," Nadella recalls a Microsoft manager who announced in the early days, "Hey, Satya, I know these five people who don't have a growth mindset." Nadella writes, "The guy was just using growth mindset to find a new way to complain about others. That is not what we had in mind."

Even today, Microsoft leaders acknowledge that the culture change isn't over . Things have improved under Nadella, but the company culture is still far from perfect.

Diversity is an opportunity for improvement at Microsoft. Much like the larger technology industry , Microsoft still employs relatively few women and people of color in leadership and technical roles.

One of Nadella's biggest gaffes as CEO happened early on in his tenure, when he suggested women should not ask for raises, but rely on "faith" and "karma." After these comments, Nadella sent out an internal memo admitting to his mistake, explaining how he planned to learn from it, and stating his belief in "equal pay for equal work."

Nadella writes in "Hit Refresh" that in some ways he's glad to have belly-flopped in public. "It helped me confront an unconscious bias I didn't know I had," Nadella writes, "and it helped me find a new sense of empathy for the great women in my life and at my company."

Kevin Oakes, who runs a human-resources research company that helped Microsoft with its shift toward growth mindset, sees Nadella as an exemplar of a leader during a transition. That's largely because Nadella practices the growth mindset he preaches. In a presentation at Talent Connect, an annual conference organized by LinkedIn (which is owned by Microsoft), Oakes said Nadella has been Microsoft's "culture champion." Nadella understands that organizational culture is critical to the company's performance, Oakes said.

But today's Microsoft is still far from perfect. The positive contributions of growth mindset have not yet matched up with diversity and equity for Microsoft's workforce, according to some employees. Microsoft is the subject of a gender discrimination lawsuit still pending , which was denied class-action status by a federal judge. Employees have also openly alleged sexual harassment and discrimination.

The company released its first diversity and inclusion report in 2019 to track its progress in hiring - and retaining - a more diverse workforce. Results from that report showed that minorities in Microsoft's US offices earned $1.006 for every $1 white employees earned. A closer look reveals that white men still held more high-paying leadership positions than women or underrepresented minorities.

Meanwhile, Microsoft leadership still has some philosophical differences with employees as it relates to employee activism. Employee groups have protested Microsoft and Microsoft-owned GitHub's relationship with Immigration and Customs Enforcement, and more recently, some employees have said Microsoft's relationship with oil and gas companies is at odds with the company's goal to become "carbon negative" by 2030.

The Xbox Adaptive Controller is designed to be used by people with limited mobility. It was advertised during the 2019 Super Bowl.

At that point, Neal recalled, a third meeting participant addressed the male colleague to ask whether perhaps he hadn't understood the female colleague's point. And Neal said it wasn't a passive-aggressive attack. Senior leaders are encouraged to "be curious and ask questions, versus making statements," as a way of modeling growth mindset, he added.

Microsoft has been equally vocal about diversity and inclusion within its customer base, building products that are accessible to as many users as possible. Ben Tamblyn, a 15-year company veteran and Microsoft's director of inclusive design, mentioned Xbox as a prime example. In 2018, Tamblyn helped oversee the release of the Xbox Adaptive Controller , which makes it easier for gamers who have limited mobility or physical impairments to play. (Interviews with Neal and Tamblyn were arranged by Microsoft's public-relations firm.)

Microsoft is a case study in growth mindset

Microsoft's culture shift, and its accompanying business turnaround, is already a case study in business schools and in reports from management consultancies and research centers . That makes sense to Mary Murphy, a professor of psychological and brain sciences at Indiana University and Dweck's co-author on the paper about growth mindsets within organizations.

Growth mindset is essential for innovation in the technology industry, Murphy said, where change rarely happens incrementally. Instead, there are big inflection points from which there's no return. Microsoft, Murphy added, needs to be on the "cutting edge" of growth mindset in order to stay relevant.

Nadella, for his part, has modeled a growth mindset from the top of the organization, not least in his response to his tone-deaf comments about gender and compensation. "I learned, and we will together use this learning to galvanize the company for positive change," Nadella wrote in the memo he sent apologizing for the comments. "We will make Microsoft an even better place to work and do great things."

Got a tip? Contact reporters Shana Lebowitz via email at [email protected] and Ashley Stewart via email at [email protected] , message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242 .

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Satya Nadella employed a 'growth mindset' to overhaul Microsoft's cutthroat culture and turn it into a trillion-dollar company — here's how he did it

• Microsoft is a case study in how a growth-mindset culture can help companies succeed in the future economy.

• Microsoft is a trillion-dollar company thanks largely to a culture shift led by Satya Nadella.
• Since Nadella became CEO in 2014, he's encouraged the entire company to adopt a growth mindset, or the belief that skills are developed through hard work and challenges are opportunities to learn.
• Before Nadella took over, Microsoft was characterized by competition between teams and between individual employees.
• Now, in keeping with a growth mindset, Microsoft evaluates employees' performance based partly on how much they helped their colleagues succeed. The company also looks to learn from its former rivals in the tech industry.
• Business Insider spoke with a range of company insiders and organizational researchers to get the inside story on how to change the culture of a 150,000+ employee software giant.
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A cartoonist once drew an illustration depicting Microsoft's organizational chart as warring factions. 

Take a look and you'll see three separate gangs: one blue, one green, one yellow. The gangs are assembled in pyramid-shaped hierarchies, with one leader at the top, two or three deputies at the next level, and so on.

A hand sticks out from each pyramid, pointing a gun directly at one of the others. It's clear. This is war.

And then Satya Nadella became CEO.

Nadella described the era of warring gangs in his 2017 memoir-manifesto, " Hit Refresh :" "Innovation was being replaced by bureaucracy. Teamwork was being replaced by internal politics. We were falling behind."

That particular cartoon – drawn in 2011 by a Google employee named Manu Cornet , no less – made changing Microsoft's culture Nadella's No. 1 goal as CEO.

"As a 24-year veteran of Microsoft, a consummate insider, the caricature really bothered me. But what upset me more was that our own people just accepted it," Nadella wrote. "When I was named Microsoft's third CEO in February 2014, I told employees that renewing our company's culture would be my highest priority."

Since becoming CEO, Nadella has been credited with a grand reinvention of Microsoft, exemplified by its market value exceeding $1 trillion, one of just a handful in history to hit that mark. When Nadella first took over, its market value was around $300 billion.

One of the keys to this transformation is a psychological concept that's become a mantra at Nadella's Microsoft: growth mindset . The concept has helped Microsoft made the shift to remote work with aplomb, reaching a market cap of more than $1.6 trillion, showing that Nadella's strategy has survived the pandemic intact.

Microsoft has traded a fixed mindset for a growth mindset

Growth mindset describes the belief that skills are developed through hard work and that challenges are opportunities to learn. Fixed mindset, on the other hand, refers to the belief that talent is innate and that struggling is a sign of failure. Research on the difference between growth and fixed mindset — and how they predict success — was pioneered by Stanford's Carol Dweck.

Early on in her career as a developmental psychologist, Dweck visited children at school and presented them with a series of increasingly difficult puzzles. Her goal was to better understand how people cope with failure. Some students, she found, weren't fazed by it.

In her 2006 book, " Mindset ," she recalls one 10-year-old boy who "pulled up his chair, rubbed his hands together, smacked his lips, and cried out, 'I love a challenge!'"

Dweck would spend the next five decades trying to figure out the difference between people who relish a good challenge and those who fear failure. Scores of studies published under her name suggest that people who see intelligence and abilities as learnable are more successful, personally and professionally, than people who think they're static.

Recently, Dweck coauthored a study that drew a link between growth mindset and organizational success . Employees who think their companies have a fixed mindset, the study found, interpret the company's culture as less collaborative, less ethical, and less willing to take risks than employees who think their companies have a growth mindset.

Given the rapid pace of technological change , these research findings are hyper-relevant. Across industries, adopting a growth mindset may be the only way to survive, and certainly the only way to thrive. When neither executives nor rank-and-file employees can predict what their jobs will look like next week, they need to embrace the resulting vulnerability, and get excited about learning.

Plenty of companies, in industries from telecommunications to early education, talk about cultivating a growth mindset , and about looking for job candidates who have it . But Microsoft is perhaps the most powerful example of an organization that has used growth mindset, and the psychology behind it, to rebuild its culture. 

In many ways, fixed mindset and growth mindset can describe Microsoft before and after Nadella. 

Nadella has encouraged Microsoft employees to be 'learn-it-alls' instead of 'know-it-alls'

Since the era of Bill Gates, Microsoft's founder and first CEO, its leadership had generally rewarded the smartest person in the room. And Microsoft performed well under Gates, but that performance came at a cost.

Gates was famous for meltdowns and browbeating – so much so that Microsoft cofounder Paul Allen once described working with Gates as "being in hell." Gates would only back down if you could convince him you knew what you were talking about, Allen said.

Gates' successor, Steve Ballmer, also known for an explosive temper, later presided over the atmosphere depicted in that cartoon Nadella was determined to address. Ballmer was known for cultivating a culture in which Microsoft teams warred with each other, as previously reported by Business Insider .

Nadella, who joined Microsoft as an engineer in 1992, came up in this culture, before becoming CEO in early 2014. 

By that point, the company's bid to compete in the smartphone market through the purchase of Nokia was proving to be a burden and would lead it to write off nearly the entire $7.6 billion acquisition price. The personal computer market was shrinking, leading to declines in Microsoft's flagship Windows operating system business, and the Xbox One console's poorly received launch made it a punchline.

Microsoft's history as a tech-industry pioneer wouldn't help the company compete, Nadella wrote in an email to employees on his first day as CEO. The company needed a change in mindset.

"Our industry does not respect tradition — it only respects innovation," Nadella wrote on Feb. 4, 2014,  in a memo to employees days after taking on the CEO role. "Every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this."

Nadella's leadership philosophy evolved into the adoption of a growth mindset. He asked employees to be "learn-it-alls," not "know-it-alls," and promoted collaboration inside and outside the organization. Employees are now evaluated partly on how much they've helped others on their team.

Microsoft introduced a new performance-management framework based on growth mindset

With any company culture shift, executives run the risk of promoting jargon more than action, and of HR representatives being the only ones who know there's a culture change underway.

Microsoft has tried to avoid that fate, not only by training its employees on the psychology of growth mindset, but also by embedding the concept into its daily work flow. 

Prompts to adopt a growth mindset appear on posters throughout Microsoft's campuses ( something at which employees sometimes poke fun ). At the start of a meeting, a manager might remind colleagues to approach an issue with a growth mindset.

And in one of the most significant manifestations of growth mindset, Microsoft has eliminated stack ranking .

Stack ranking was famously used by Jack Welch when he was CEO of General Electric. Ballmer used the system at Microsoft to evaluate employees, although he did start phasing it out prior to his departure. Microsoft managers had to rank their employees from one to five in equal measure. Which meant that, no matter how good the employees were, some of them had to get the lowest ranking of a five.

Performance was defined in stack ranking as the quality of individual work, and that emphasis on individual performance was linked to fierce competition among Microsoft employees. It was also a barrier to Microsoft's innovation, since it facilitated a culture that rewarded a few standout team members and even gave employees incentive to hope their colleagues failed. 

"We had a little bit of a 'not-invented-here' syndrome," Microsoft Chief People Officer Kathleen Hogan previously told Business Insider , referring to the tendency for developers and even organizations to reject acceptable solutions to problems if they hadn't developed those solutions themselves.

Dweck's research helps explain this trend, too. Her studies suggest that stack ranking's emphasis on "star" employees can leave everyone else afraid to try anything new, for fear of failing. In turn, that means companies are less innovative.

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Microsoft leadership says its new system for evaluating employees instead rewards collaboration. Managers and employees meet often to discuss performance , in keeping with the general trend of companies nixing annual reviews and having managers regularly speak with employees about their work.

"What we really value is three dimensions," said Hogan , Microsoft's chief people officer. "One is your own individual impact, the second is how you contributed to others and others' success, and the third is how you leveraged the work of others." 

To use Hogan's examples, maybe a more seasoned employee helped someone new to the team, or a software engineer built on another engineer's work instead of reinventing it. 

Microsoft recently applied growth mindset to a new framework for managers : model, coach, care. That's a combination of setting a positive example for employees, helping the team adapt and learn, and investing in people's professional growth.

To measure the impact of these initiatives in real time, Microsoft emails employees with a different question every day asking how they're feeling about the company and its culture.

The shift from competition to collaboration might seem like it would be a breath of fresh air. And on the whole, it has been. But employees say it's presented its own challenges, too.

Nadella pushes Microsoft executives to take on stretch assignments

Nadella asked Peter Lee , one of the company's top researchers, to make a big change.

It was 2017 and Lee – now corporate vice president of Microsoft healthcare – had long worked on broader technology problems as a key leader in Microsoft Research, the company's research division. 

Nadella wanted him to take on a new challenge and lead the company's emerging health care business, using his background in artificial intelligence and cloud computing to find new ways to tune the products to the needs of healthcare companies.

"Taking on healthcare was something that really perplexed me at first," he said. "I joked Satya sent me out into the Pacific Ocean and said, 'Go find land.'"

Adopting a growth mindset can be uncomfortable, he said. 

"Growth mindset is a euphemism because it can feel pretty painful, like a jump into the abyss," he said. "You need to be able and willing to confront your own fixed mindset – the things that make you believe something can't work. It's painful to go through personally, but when you get past it, it's tremendously rewarding."

The transition has been edifying, both in terms of his personal growth – Lee was recently named to the National Academy of Medicine – and Microsoft's growth in the industry, as it establishes itself as a meaningful player in healthcare tech. 

Microsoft now sees the business case for letting go of its rivalries with other tech giants

Under Ballmer, Microsoft was notorious for prioritizing its Windows operating system and Office productivity applications businesses over the rest of the company – at one point, it even canceled the Courier tablet, which would have been an early, future-looking competitor to Apple's iPad, because it may have undermined Windows.

Likewise, Microsoft once shunned Linux, a free open-source operating system once considered the biggest threat to Windows. Ballmer once called it a "cancer." But early on in Nadella's time as CEO, Microsoft changed tack and proclaimed, " Microsoft loves Linux ."

It wasn't just Microsoft being friendly. There was a strong business case for blurring boundaries. At the time, Microsoft said it realized its customers used both Windows and Linux, and saw providing support to both as a business opportunity on-premise and in the cloud. That would have been unthinkable in the Ballmer years, but it's proven to be a savvy business move: Microsoft recently hinted that Linux is more popular on its Azure cloud platform than Windows itself.

Microsoft's relationship with Salesforce has followed a similar trajectory. Whereas Ballmer had frequent and public bouts with Salesforce CEO Marc Benioff , Microsoft under Nadella put aside its rivalry with Salesforce – which competes directly with Microsoft's customer-relationship-management Dynamics 365 product – in order to ink a big cloud deal that was good for the company overall. 

Nadella even invites leaders from companies across industries to Microsoft's CEO Summit so the executives can learn from each other. Ballmer, meanwhile, famously snatched an employee's iPhone at a company meeting and pretended to stomp on it.

Which is not to say Microsoft always plays nice in the Nadella era. The company last summer changed licensing agreements to raise prices — often significantly — when customers choose to run certain Microsoft software on rival clouds including Amazon Web Services or Google Cloud. And it's been trading public barbs with AWS over the still contested $10 billion Pentagon cloud contract.

The Trump administration awarded the contract to Microsoft over AWS, but Amazon is challenging the decision in court, alleging political interference. The Pentagon in September upheld its decision to award the contract to Microsoft but AWS is expected to file a new complaint as part of the lawsuit next week.

The culture shift at Microsoft is an ongoing process

The beginning of Microsoft's culture shift was rocky.

In "Hit Refresh," Nadella recalls a Microsoft manager who announced in the early days, "Hey, Satya, I know these five people who don't have a growth mindset." Nadella writes, "The guy was just using growth mindset to find a new way to complain about others. That is not what we had in mind."

Even today, Microsoft leaders acknowledge that the culture change isn't over . Things have improved under Nadella, but the company culture is still far from perfect.

Diversity is an opportunity for improvement at Microsoft. Much like the larger technology industry , Microsoft still employs relatively few women and people of color in leadership and technical roles.

One of Nadella's biggest gaffes as CEO happened early on in his tenure, when he suggested women should not ask for raises, but rely on "faith" and "karma." After these comments, Nadella sent out an internal memo admitting to his mistake, explaining how he planned to learn from it, and stating his belief in "equal pay for equal work." 

Nadella writes in "Hit Refresh" that in some ways he's glad to have belly-flopped in public. "It helped me confront an unconscious bias I didn't know I had," Nadella writes, "and it helped me find a new sense of empathy for the great women in my life and at my company." 

Kevin Oakes, who runs a human-resources research company that helped Microsoft with its shift toward growth mindset, sees Nadella as an exemplar of a leader during a transition. That's largely because Nadella practices the growth mindset he preaches. In a presentation at Talent Connect, an annual conference organized by LinkedIn (which is owned by Microsoft), Oakes said Nadella has been Microsoft's "culture champion." Nadella understands that organizational culture is critical to the company's performance, Oakes said.

But today's Microsoft is still far from perfect. The positive contributions of growth mindset have not yet matched up with diversity and equity for Microsoft's workforce, according to some employees. Microsoft is the subject of a gender discrimination lawsuit still pending , which was denied class-action status by a federal judge. Employees have also openly alleged sexual harassment and discrimination.

The company released its first diversity and inclusion report in 2019 to track its progress in hiring — and retaining — a more diverse workforce. Results from that report showed that minorities in Microsoft's US offices earned $1.006 for every $1 white employees earned. A closer look reveals that white men still held more high-paying leadership positions than women or underrepresented minorities.

Microsoft has since announced plans to double the number of Black leaders and employees within the company, and the number of Black suppliers with which it works.

Meanwhile, Microsoft leadership still has some philosophical differences with employees as it relates to employee activism. Employee groups have protested Microsoft and Microsoft-owned GitHub's relationship with Immigration and Customs Enforcement, and some employees have said Microsoft's relationship with oil and gas companies is at odds with the company's goal to become "carbon negative" by 2030. 

Some Microsoft employees say the company is making progress. Rich Neal, a senior director who's been with the company since 2003, recalled a recent meeting in which a male colleague all but repeated the same comment a female colleague had shared 15 minutes earlier.

At that point, Neal recalled, a third meeting participant addressed the male colleague to ask whether perhaps he hadn't understood the female colleague's point. And Neal said it wasn't a passive-aggressive attack. Senior leaders are encouraged to "be curious and ask questions, versus making statements," as a way of modeling growth mindset, he added.

Microsoft has been equally vocal about diversity and inclusion within its customer base, building products that are accessible to as many users as possible. Ben Tamblyn, a 15-year company veteran and Microsoft's director of inclusive design, mentioned Xbox as a prime example. In 2018, Microsoft released the Xbox Adaptive Controller , which makes it easier for gamers who have limited mobility or physical impairments to play. (Interviews with Neal and Tamblyn were arranged by Microsoft's public-relations firm.)

Microsoft is a case study in growth mindset

Microsoft's culture shift, and its accompanying business turnaround, is already a case study in business schools and in reports from management consultancies and research centers . That makes sense to Mary Murphy, a professor of psychological and brain sciences at Indiana University and Dweck's co-author on the paper about growth mindsets within organizations. 

Growth mindset is essential for innovation in the technology industry, Murphy said, where change rarely happens incrementally. Instead, there are big inflection points from which there's no return. Microsoft, Murphy added, needs to be on the "cutting edge" of growth mindset in order to stay relevant.

Nadella, for his part, has modeled a growth mindset from the top of the organization, not least in his response to his tone-deaf comments about gender and compensation. "I learned, and we will together use this learning to galvanize the company for positive change," Nadella wrote in the memo he sent apologizing for the comments. "We will make Microsoft an even better place to work and do great things."

Got a tip? Contact reporters Shana Lebowitz via email at [email protected] and Ashley Stewart via email at [email protected] , message her on Twitter @ashannstew, or send her a secure message through Signal at 425-344-8242 .

Watch: Microsoft News' corporate vice president explains how his team avoids fake news sorting through 170,000 stories a day

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Home / Case Studies / London Stock Exchange Group

London Stock Exchange Group supercharges investor analysis process from 20 hours to 90 minutes with SharePoint Syntex

Published on November 1, 2021

London Stock Exchange Group

London Stock Exchange Group is one of the world’s largest providers of financial data and infrastructure. Working with over 40,000 customers and over 400,000 end users across 190 countries, LSEG provides information, insights, and technology to enable customers to execute critical investing, trading, and risk decisions with confidence. The organization’s vision is to enable businesses and economies around the world to fund innovation, manage risk, and create jobs.

As a financial service organization focused heavily on utilizing innovative technology to provide their customers the best service, LSEG joined a Microsoft preview program in early 2020 to preview and provide feedback on Microsoft’s latest investment in Content Services.

With SharePoint Syntex, one of two new Modern Content Services products previewed, London Stock Exchange Group found that they could significantly reduce time spent documenting key investor information.

One of the many tasks analysts at LSEG are responsible for is analyzing information captured in Key Investor Information Documents (KIIDS), and manually inputting key information in the organization’s systems. Information such as fund identifiers, charges, and dates are used in customer-facing services. It’s estimated each week, each analyst could spend an average of 15-20 hours to capture the information from 250 documents, logging this information in the necessary systems.

Seeing the inefficiencies this manual process caused, London Stock Exchange Group saw a prime opportunity to test out SharePoint Syntex as a potential solution.

To pilot Syntex, LSEG had 40 analysts use Syntex to ingest their KIIDs and capture the necessary information. They found that when using Syntex, they were able to reduce the time spent processing 250 documents per analyst, per week, down to 60-90 minutes .

With the initial pilot of Syntex, saving the organization nearly 1,240 days of work time per week, London Stock Exchange Group has begun testing other use cases, expanding on the entities that are extracted from documents, onboarding new teams, and creating new Syntex models to capture other information key to the organization.

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Microsoft Case Study

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Introduction

Symptoms of the problems, problem statements, problem analysis, alternatives for the problems and their evaluation, course of action (recommendations).

The rapidly growing world of industrialization and globalization has witnessed a sharp growth of industries, which are substantial in economic and social growth. Technological advancement is probably one of the major characteristics of the industrial revolution in the postmodern world with virtually every important aspect of a technical profession, largely relying on technological support to operate efficiently.

Notwithstanding their aptitude to integrate business ideas that support them through the rapid diffusion globalized economy, corporate organizations are facing unrelenting challenges in their operations. Since its advent into the corporate world, Microsoft Corporation has been arguably one of the prevalent corporate names in the technology industry, with its performance positioning it among the fortune 500 organizations.

Analogous to other organizations, Microsoft has also been facing challenges that have marred its corporate growth. Fundamental to this notion, the purpose of this study is to analyze problems that Microsoft faces and provide possible alternatives and recommendation.

Notwithstanding its long outstanding performance within the technological business paradigm with unbroken performance track record, Microsoft is experiencing something different in the contemporary days. Several critical symptoms to its downfall in the technological consumer market are becoming more eminent in the current days.

Dropping in Microsoft’s market value is one of the first symptoms that significantly demonstrate possible problems confronting Microsoft Corporation; hence, its fall in market prominence and dominance in the last two years before the advent of Apple, which has proved to be one of the world’s most honored technological companies.

Another significant symptom to the problems marring corporate growth is the gradual loss of human capital that has been forming potential strengths to the initial success of Microsoft Corporation.

As postulated from the case study, Microsoft is gradually losing a majority of its innovative human resources to the prevailing competition with many of its top executives withdrawing from the organization either through formal work retirement process or attracted by competitors.

Microsoft third most possible symptoms to its current problems is technological eschew or stagnancy with the case study report indicating that Microsoft is steadily losing value and lagging behind its competitors as the company has failed to continue producing modern technologies including gaming devices, tablets, mobile phones, and other media.

From its initial growth in productivity that made almost all its employees virtually millionaires, one of Microsoft’s significant symptoms of downfall is its low revenue generation as compared to its operating income. This performance trend started stagnating and fluctuating from the beginning of 2008 towards 2010.

From the case report, employee rapport with Microsoft Corporation started dwindling following the company’s inability to handle integral employees concerns including low pays of wages and reduction of benefits despite the company’s ability to record high profits. Indicative of these symptoms, Microsoft is now struggling to deal with numerous problems within its operations.

Microsoft Corporation is facing a continuum of challenges in the recent days. One of the major problems that form a great challenge in the progress of Microsoft within the technology realm is low productivity, underproduction, or simply poor organizational performance. Microsoft is gradually falling short of market performance, which is characterized by low performance as opposed to its initial phenomenal success.

Also, as a software giant, flagship products are becoming rare. From the case report produced by the Wall Street, Microsoft was lagging behind its competitors in almost all aspects of business including technological advancement, marketing techniques, and relatively low financial capacity following the invasion of other technical companies.

Management is one of the critical success factors that determine the initiation and resilience of the organizations in its operations. Organizational management is normally responsible for administering leadership techniques that determine organizational performance as it controls both human and financial capital.

According to the case, as provided by Wall Street, poor management is one of the potential problems affecting Microsoft in the contemporary days within evidence of bureaucratic management that has significantly affected creativity and stock performance.

The case study indicated that innovative workforce is withdrawing with members claiming that Microsoft was responding too slowly to technological changes and other employees cited that Microsoft failed to address their concerns.

Any modern company aims at organizational success that is currently achievable by addressing significant production factors including actively focusing on quality of products that meet customers’ demands and preference. Research on this case study unveiled that Microsoft is currently facing stiff market competition from potential competitors in the technology industry, including the rapidly growing Apple, Mac, and Linux.

With demand for advanced technologies cutting across different devices and services, Microsoft is facing technological competition from the PC market to its services, including the Windows division that provides computer-enabled operating systems. This competition is stiffening from software production to hardware systems, which were Microsoft’s main tools for competitive advantage.

Low and deprived productivity

Organizational productivity is determined by numerous factors that entail financial comportment and market performance. From the case study provided about Microsoft, market performance and financial status clearly indicate that Microsoft is currently surviving under deprived productivity.

Discussing on financial performance that signifies performance or productivity in organization, Exhibit 3 provided in the study can significantly demonstrate this concern. A closer analysis of annual financial statements of revenue and operating income of Microsoft from 2008-2010, the company’s financial stability is dwindling.

The financial statement indicates that Microsoft has been recording profits, but in quite unstable performance characterized by hikes and drops between the years. In 2008, the company recorded $ 60, 420 million values of revenue and $22,217 operating income (loss).

In 2009, the company recorded annual revenues worth $58,437 and reported annual operating income worth $20, 363. This financial performance trend proves that the company is recording unsteady performances.

Management forms an integral part in organizational performance as policies and objectives articulated by management and their competence normally influence organizational success. One of the useful indicators that point to management failure in Microsoft is the continued employee-management wrangles that have posed serious issues in the company.

As indicated by the report, despite its uninterrupted track record in attracting and retaining significant human capital, the company has in the recent past witnessed a substantial loss in its key creative human resource. Top executives attached to business long term endeavors have resigned and others sought employment from other potential employers.

The current management has failed considerably in handling essential employees’ concerns including complaints regarding wages and benefits reductions, characterized by a widening compensation gap between executives and employees.

The management’s laxity in adopting new technologies that are integral for intensifying competition in the technology industry is keeping the company at stake, thus forcing it to struggle in the market performance.

Technological market competition

The response to the market demands and customers’ preference for certain products is currently one of the paramount business factors that entrepreneurs have recognized to have a potential impact on a firm’s stability. A key problem facing management in Microsoft is the constantly rising technological market competition that in most occasions has found the company unwary.

The fast pace at which other technologies are rising and their capability to respond to the rapid technological changes has created enormous problems to Microsoft. The company has lagged behind in realizing innovations involved in new technologies, including supporting the development of gaming services, tablets, mobile technologies, and other sources of media.

Microsoft has failed to recognize the rising demand for Smartphone technologies and continued to perform in dwarf of PCs. The company is performing dismally in server and tools and in providing online services while at the same time, the entertainment and devices section are dwindling in its performance in the technology market.

Problems normally occur in businesses, but they only become detrimental when alternatives and approaches to handle them never emerge. The main problem in the case of Microsoft that has a significant influence in the existence and continuation of others is the issue of management itself. The management is arguably part of barrier to implementation of important strategies in Microsoft.

In a bid to reclaim its aptitude and performance in the rapidly changing technological industry, reshuffling and changing the management style is paramount for positive results in Microsoft Corp. Bureaucratic management stifles performance and each significant change will begin by streamlining the management.

As stated from the case, the current management is autocratic and tyrannical, with little expertise as top executives, including the current C.E.O Steve Ballmer have not received any credible welcome from directors and employees.

Attracting and retaining innovative workforce to help in innovating new technologies would help in reshaping Microsoft Corp. as talented human resource is imperative in analyzing problems, making critical decisions, and supporting management with progressive ideas.

One of the essential factors to consider in the technology industry is the trendiness in the products as integrating services and products with significantly advanced technologies would greatly aid in improving the market demand for its products.

After identifying innovative workforce that would produce competitive products and brands, it would be significant for Microsoft Corp. to consider expanding its market through strategic marketing techniques and enhancing the prevailing partner relationships. The restructured managed is capable of building more powerful partners.

Step 1: The entire action plan would require one year for effective implementation. Each step would require three months. The first would be a three-month strategic action plan development, which denotes the beginning of changes. The first step would involve revamping the management to allow integration of significant changes in Microsoft Corp. Designing implementation committee is integral in this phase.

Step 2: The second phase of change that would create significant change to Microsoft is attracting new and innovative workforce that would help in generating ideas on developing new technologies. The new management can practice this aspect throughout the company’s operations, though for the start, three months are adequate to identify the desired workforce competent enough for improving Microsoft.

Step 3: In three months, the new talented workforce will work with the management team in critical decision making to improve the company’s operations including changing and designing new and advanced products that follow the market trend. This move would help restore the company’s reputation on the quality of products and subsequently improve its market rapport with clients.

Step 4: The last step that would significantly place Microsoft Corp. in the best market position would involve developing a global marketing team and designing strategic marketing plans that will aid in expanding the market share for products of Microsoft. For instance, a huge marketing team to market the new windows 7 and Windows 8 is paramount.

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IvyPanda. (2019, July 5). Microsoft. https://ivypanda.com/essays/microsoft-case-study-2/

"Microsoft." IvyPanda , 5 July 2019, ivypanda.com/essays/microsoft-case-study-2/.

IvyPanda . (2019) 'Microsoft'. 5 July.

IvyPanda . 2019. "Microsoft." July 5, 2019. https://ivypanda.com/essays/microsoft-case-study-2/.

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Free MS Word Case Study Templates

By Kate Eby | January 18, 2024

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We’ve collected the top free Microsoft Word case study templates for marketing managers, writers, digital marketing specialists, sales teams, and analysts. Customize these templates for documenting, communicating, and analyzing marketing activities. 

On this page, you'll find eight dynamic monthly marketing report templates, including those for a  case study report , a  project case study , a  marketing case study , a  one-page case study template , and more.

Microsoft Word Simple Case Study Template

Download the Sample Simple Case Study Template for Microsoft Word  

Download the Blank Simple Case Study Template for Microsoft Word  

When to Use This Template:  This straightforward template is ideal for junior or entry-level marketing associates to kickstart their journey in writing case studies. Download the version with sample copy for helpful pointers on crafting a case study.  

Notable Template Features: This template features a basic structure for presenting a case study without overwhelming details. Fill in the  Introduction, Customer Challenge, Marketing Strategies, Results, and  Call-to-Action (CTA)  sections to craft a simple case study.

Microsoft Word Case Study Report Template

Download the Sample Case Study Report Template for Microsoft Word  

Download the Blank Case Study Report Template for Microsoft Word  

When to Use This Template:  This template is suitable for professionals who need to produce comprehensive case study reports with detailed analysis. Download the version with a sample case study for guidance on writing a report. 

Notable Template Features:  This case study report template provides a structured format for presenting data, research findings, and in-depth insights. There are editable sections for adding an executive summary, introduction, statement of the problem, decision criteria and assumptions, data analysis, alternative courses of action, recommendations, and more. 

For resources on marketing case studies in presentation-ready format, check out this collection of free marketing case studies in PowerPoint format .

Microsoft Word Project Case Study Template

Download the Sample Project Case Study Template for Microsoft Word   Download the Blank Project Case Study Template for Microsoft Word  

When to Use This Template:  This template is for project management or cross-functional teams that need to produce comprehensive case study reports with a detailed analysis. Download the version with sample copy to get a clear idea of what to include in each section.  

Notable Template Features: You’ll find a structured layout, starting with an introduction page featuring visual elements such as a line chart for success measurement, a pie chart for impact analysis, and a bar chart for metric comparison.

These free case study templates in Google Docs format can help your marketing team efficiently create and collaborate.

Microsoft Word Marketing Case Study Template

Download the Sample Marketing Case Study Template for Microsoft Word   Download the Blank Marketing Case Study Template for Microsoft Word  

When to Use This Template:  Marketing managers, content marketers, and sales teams can use this template to showcase the success of marketing initiatives to internal and external stakeholders. Download the sample version to get a quick start on crafting your case study report. 

Notable Template Features:  Filled with sample images and featuring a professional layout, the template’s visual appeal helps you present complex information in an easily digestible and compelling format. Complete the  About Us, Challenge, Solution, Case Study,  and  Benefits  sections to build a structured narrative that showcases your marketing strategy from problem identification to solution implementation. 

Explore these free marketing case study templates to find more options in multiple formats. Whereas a marketing case study template showcases marketing strategies and their outcomes, a business case template provides a broader analysis of business decisions and impacts. See this  article with free business case study resources , ready-to-use templates, and guidance on analyzing and presenting business scenarios. 

Microsoft Word One-Page Case Study Template

Download the Sample One-Page Case Study Template for Microsoft Word Download the Blank One-Page Case Study Template for Microsoft Word

When to Use This Template:  Sales reps and teams can use this template to create one-page case studies for sales pitches and presentations. Download the sample version with example text for an easy guide on creating concise reports. 

Notable Template Features:  The template is designed to condense complex information into a concise, easy-to-glean format. Use the space allotted for each section to keep the case study to one page.

Microsoft Word Problem-Solution-Impact Case Study Template

Download the Sample Problem-Solution-Impact Case Study Template for Microsoft Word

Download the Blank Problem-Solution-Impact Case Study Template for Microsoft Word

When to Use This Template:  Marketing teams can use this template to showcase a complete narrative, from identifying a specific challenge through the solutions applied to the tangible impacts achieved. Download the sample version that includes an example case study for helpful guidance on crafting a comprehensive report. 

Notable Template Features: This template sports a structured, three-part storytelling approach, emphasizing the cause-and-effect relationship in case studies. Complete side-by-side comparisons, past vs. current year analyses, and year-over-year bar charts to present comparative data.

Microsoft Word Comparative Study Template

Download the Sample Comparative Study Template for Microsoft Word

Download the Blank Comparative Study Template for Microsoft Word

When to Use This Template:  Users who need to conduct side-by-side comparisons of products, strategies, or performance metrics should download this template. Opt for the version with sample copy to get an idea of how the completed document should look. 

Notable Template Features: This template’s structured design facilitates direct comparisons with sections such as side-by-side comparisons and year-over-year performance analysis — unlike others that may focus on narrative or single-subject analysis. It's specifically crafted to simplify the visualization of comparative data, making it a go-to for analytical and data-driven presentations.

Microsoft Word Case Study Storyboard Template

Download the Sample Case Study Storyboard Template for Microsoft Word

Download the Blank Case Study Storyboard Template for Microsoft Word

When to Use This Template:  This template is tailor-made for those who want to present their case studies in a visually compelling storytelling format and make complex information more relatable and memorable. Leverage the sample version of this template, which uses an example of a fictional EV-charging company as a visual guide to help you create an engaging storyboard case study. 

Notable Template Features: Unlike other templates that focus on traditional text-heavy layouts, this storyboard template emphasizes visual storytelling, using a series of illustrations and graphics to guide the audience through the case study.

Streamline and Collect All the Elements Needed for a Case Study with Smartsheet

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When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

More From Forbes

Microsoft announces new foundation model for digital pathology, diving deeper into clinical medicine.

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Microsoft CEO, Satya Nadella, speaks during the Microsoft Build conference at the Seattle Convention ... [+] Center Summit Building in Redmond, Washington, on May 21, 2024. (Photo by Jason Redmond / AFP) (Photo by JASON REDMOND/AFP via Getty Images)

Microsoft is delving even deeper into clinical medicine, evident by the announcement today highlighting the company’s development of a foundation model for pathology in partnership with Providence and the University of Washington. Specifically, the company has leveraged its significant work and progress with generative AI to launch GigaPath, the first whole-slide foundation model for digital pathology that has been pre-trained with real-world data.

The process of transforming a standard microscopy slide of tumor tissue into a high-resolution digital image is widely available. However, the analysis that takes place after digitizing these slides is crucial, as the images often contain millions of key diagnostic and prognostic data points. Tools like GigaPath can significantly transform this process by conducting whole-slide analysis to distill pertinent information.

In a study published in the journal Nature, the innovators behind GigaPath explain the research and a variety of applications for the tool’s analysis of pathology images. For example, the study found that the tool improved cancer sub-typing for nine major cancer types and outperformed all competing approaches on sub-typing. Another research parameter was testing the efficacy of a slide image to determine whether a tumor displays genetic mutations; GigaPath yet again achieved high performance marks in 17 out of 18 tasks pertaining to this.

Hoifung Poon, General Manager at Microsoft Health Futures, enthusiastically explains that tools like GigaPath and the work behind the foundation model that powers it provide opportunities for both productivity gains and creativity gains. The first refers to the amount of time and effort that this type of technology can potentially save pathologists by helping them automate routine tasks; the second refers to the fact that tools like this can potentially unlock new levels of insight and connections that may not be solely visible to the naked eye, given the extensive training and data points that these models are based on.

Jonathan Carlson, Managing Director of Research at Health Futures, further explains that the clinical applications for this technology are endless, especially as new ways to connect morphological features and genetic features emerge. Holistically, this technology paves the way for bold new inroads into the world of precision medicine.

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Precision medicine, though not new conceptually, has gained significant traction in recent years. It refers to the science and approach to understanding disease treatment and prevention by taking into account an individual’s specific genomic makeup and characteristics. Billions of dollars are being funneled into this arena as research is increasingly ramping up on proving the value of this industry.

Nevertheless, the work in this space is just getting started, and the industry has a long way to go with regards to these tools. For GigaPath, innovators and industry stalwarts will have to navigate how to embed this technology in actual clinical environments and scale this to pertinent settings. However, if done correctly and in a manner that safeguards accurate healthcare outcomes, privacy, and ethical use-principles, there is significant potential for this technology.

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